Real-time bidding (RTB) is a means by which advertising inventory is bought and sold on a per-impression basis, via programmatic instantaneous auction, similar to financial markets. With real-time bidding, advertising buyers bid on an impression and, if the bid is won, the buyer's ad is instantly displayed on the publisher's site. Real-time bidding lets advertisers manage and optimize ads from multiple ad networks by granting the user access to a multitude of different networks, allowing them to create and launch advertising campaigns, prioritize networks, and allocate percentages of unsold inventory, known as backfill.
A typical transaction begins with a user visiting a website. The user visit to the website triggers a bid request that can include various pieces of data such as the user's demographic information, browsing history, location, and the page being loaded. The request goes from the publisher to an ad exchange, which submits it and the accompanying data to multiple advertisers who automatically submit bids in real time to place their ads. Advertisers bid on each ad impression as it is served. The impression goes to the highest bidder and their ad is served on the page. This process is repeated for every ad slot on the page.
Currently, real-time bidding platforms that are used for online advertising divide target users into multiple user segments and assign bid prices for each segment. User segments and corresponding bid prices are typically assigned manually by campaign managers prior to campaign launch. Generally, a large number of users (in millions) belong to one segment and share the same bid price.